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Retirement Plans and Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Retirement Plans and Other Postretirement Benefits The Company sponsors two qualified and three non-qualified retirement plans. Substantially all employees participate in the 401(k) plan. Both the qualified defined benefit plan and the two non-qualified supplemental defined benefit plans have been frozen since 2002. All participants in the frozen plans are 100% vested in their accrued benefit and all non-qualified supplemental defined benefit plan participants are receiving payments. Certain employees participate in a non-qualified defined contribution plan.
Qualified Plans
All employees participate in the 401(k) plan and receive a 100% vested 3% "safe harbor" company contribution based on employees' eligible earnings. The Company matches each dollar of employee contributions up to a 5% maximum — in addition to maintaining the automatic 3% "safe harbor" contribution. The matching company contribution vests after 5 years of service. The 401(k) plan is fully funded.
The Company's policy for the frozen defined benefit plan is to contribute to the plan amounts which are actuarially determined to provide sufficient funding to meet future benefit payments as defined by federal laws and regulations.
For the two qualified plans, all assets are held in their respective plan trusts.
Non-qualified Plans
The non-qualified plans were established for specific employees whose otherwise eligible earnings exceeded the statutory limits under the qualified plans. Benefit accruals under the non-qualified supplemental defined benefit plans were frozen in 2002 and all participants are currently in payment status. Both the non-qualified frozen supplemental defined benefit plans and the non-qualified contribution plan are unfunded plans with the Company's contributions made at the time payments are made to participants.
Total Expense and Contribution Plans' Information
Total expense recognized for the non-qualified defined contribution, 401(k), defined benefit and supplemental retirement plans was $10.0 million, $9.3 million and $8.9 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Contributions to employees' accounts under the 401(k) plan and the non-qualified defined contribution plan, as well as total assets of the plans, were as follows:
($ in thousands)Year Ended December 31,
202020192018
401(k) plan
Contributions to employees' accounts
$8,187 $8,233 $7,655 
Total assets at the end of the year
228,449 206,247 167,767 
Non-qualified defined contribution plan
Contributions to employees' accounts
68 58 70 
Total assets at the end of the year
— — — 
Defined Benefit Plan and Supplemental Retirement Plans
The following tables summarize the funded status of the defined benefit and supplemental retirement pension plans as of December 31, 2020, 2019 and 2018 (the measurement dates) and identify (1) the assumptions used to determine the projected benefit obligation and (2) the components of net pension cost for the defined benefit plan and supplemental retirement plans for the following periods:
($ in thousands)Defined Benefit PlanSupplemental
Defined Benefit Plans
December 31,December 31,
202020192018202020192018
Change in benefit obligation:
Projected benefit obligation
at beginning of year
$24,820 $25,075 $28,432 $15,228 $15,404 $16,832 
Service cost
650 650 650 — — — 
Interest cost
731 997 947 453 620 566 
Plan amendments
— — — — — — 
Actuarial loss (gain)
1,021 101 (2,208)1,318 516 (789)
Benefits paid
(1,538)(2,003)(2,746)(1,312)(1,312)(1,205)
Settlements
(1,392)— — — — — 
Projected benefit obligation at end of
year
$24,292 $24,820 $25,075 $15,687 $15,228 $15,404 
Change in plan assets:
Fair value of plan assets
at beginning of year
$23,164 $22,090 $25,843 $— $— $— 
Actual return on plan assets
2,253 3,471 (640)— — — 
Employer contributions
— — — 1,312 1,312 1,205 
Benefits paid
(1,538)(2,003)(2,746)(1,312)(1,312)(1,205)
Expenses paid
(542)(394)(367)— — — 
Settlements
(1,392)— — — — — 
Fair value of plan assets at end of year
$21,945 $23,164 $22,090 $— $— $— 
Funded status$(2,347)$(1,656)$(2,985)$(15,687)$(15,228)$(15,404)
Prepaid (accrued) benefit expense$5,485 $6,690 $7,425 $(9,327)$(9,884)$(10,320)
Total amount recognized in Consolidated
Balance Sheets, all in Other liabilities
$(2,347)$(1,656)$(2,985)$(15,687)$(15,228)$(15,404)
Amounts recognized in accumulated other
comprehensive income (loss) (AOCI):
Prior service cost$— $— $— $— $— $— 
Net actuarial loss(7,833)(8,345)10,410 (6,360)(5,345)5,084 
Total amount recognized in AOCI$(7,833)$(8,345)$10,410 $(6,360)$(5,345)$5,084 
Information for pension plans with an
accumulated benefit obligation greater
than plan assets:
Projected benefit obligation$24,292 $24,820 $25,075 $15,687 $15,228 $15,404 
Accumulated benefit obligation24,292 24,820 25,075 15,687 15,228 15,404 
Fair value of plan assets21,945 23,164 22,090 — — — 
 
The change in the Company's AOCI for the defined benefit plans for the year ended December 31, 2020 was primarily attributable to better than expected asset returns, updates to mortality assumptions and updated census dates partially offset by a decrease in the discount rate and an updated mortality projection scale. The change in the Company's AOCI for the defined benefit plans for the year ended December 31, 2019 was primarily attributable to better than expected asset returns, updates to mortality assumptions and updated census dates offset by a decrease in the discount rate. The change in the Company's AOCI for the defined benefit plans for the year ended December 31, 2018 was primarily attributable to lower than expected asset returns and updates to mortality assumptions and an increase in the discount rate.
($ in thousands)Defined Benefit PlanSupplemental
Defined Benefit Plans
Year Ended December 31,Year Ended December 31,
202020192018202020192018
Components of net periodic pension
(income) expense:
Service cost:
Benefit accrual
$— $— $— $— $— $— 
Other expenses
650 650 650 — — — 
Interest cost
731 997 947 453 620 566 
Expected return on plan assets
(966)(1,222)(1,377)— — — 
Settlement loss
447 — — — — — 
Amortization of:
Prior service cost
— — — — — — 
Actuarial loss
342 310 371 302 256 310 
Net periodic pension expense$1,204 $735 $591 $755 $876 $876 
Changes in plan assets and benefit
obligations included in other
comprehensive income (loss):
      
Prior service cost
$— $— $— $— $— $— 
Net actuarial loss (gain)
277 (1,755)177 1,318 516 (789)
Amortization of:
Prior service cost
— — — — — — 
Actuarial loss
(790)(310)(371)(302)(256)(310)
Total recognized in
other comprehensive
income (loss)
$(513)$(2,065)$(194)$1,016 $260 $(1,099)
Weighted average assumptions used to
determine expense:
      
Discount rate
3.10 %4.20 %3.50 %3.10 %4.20 %3.50 %
Expected return on plan assets
4.80 %5.75 %5.90 %***
Annual rate of salary increase
******
Weighted average assumptions
used to determine benefit obligations
as of December 31:
      
Discount rate
2.08 %3.10 %4.20 %2.08 %3.10 %4.20 %
Expected return on plan assets
4.80 %5.75 %5.90 %***
Annual rate of salary increase
******
*    Not applicable.
The discount rates at December 31, 2020 were based on the average yield for long-term, high-grade securities available during the benefit payout period. To set its discount rate, the Company looks to leading indicators, including the Mercer Above Mean Yield Curve.
The assumption for the long-term rate of return on plan assets was determined by considering actual investment experience during the lifetime of the plan, balanced with reasonable expectations of future growth considering the various classes of assets and percentage allocation for each asset class.
The Company has an investment policy for the defined benefit pension plan that aligns the assets within the plan's trust to an approximate allocation of 35% equity and 65% fixed income funds. Management believes this allocation will produce the targeted long-term rate of return on assets necessary for payment of future benefit obligations, while providing adequate liquidity for payments to current beneficiaries. Assets are reviewed against the defined benefit pension plan's investment policy and the trustee has been directed to adjust invested assets at least quarterly to maintain the target allocation percentages.
Fair values of the equity security funds and fixed income funds have been determined from public quotations. The following table presents the fair value hierarchy for the Company's defined benefit pension plan assets, excluding cash held.
($ in thousands)Fair Value Measurements at
Reporting Date Using
TotalLevel 1Level 2Level 3
December 31, 2020
Asset category
Equity security funds (1)
United States
$4,367 $— $4,367 $— 
International
4,351 — 4,351 — 
Fixed income funds
13,059 — 13,059 — 
Short-term investment funds
168 168 — — 
Total
$21,945 $168 $21,777 $— 
December 31, 2019
Asset category
Equity security funds (1)
United States
$8,883 $— $8,883 $— 
International
2,214 — 2,214 — 
Fixed income funds
11,116 — 11,116 — 
Short-term investments funds
951 951 — — 
Total
$23,164 $951 $22,213 $— 
(1)    None of the trust fund assets for the defined benefit pension plan have been invested in shares of HMEC's common stock.

There were no Level 3 assets held during the years ended December 31, 2020 and 2019.
In 2021, the Company expects amortization of net losses of $0.5 million and $0.4 million for the defined benefit plan and the supplemental retirement plans, respectively, and expects no amortization of prior service cost for the supplemental retirement plans to be included in net periodic pension expense.
Postretirement Benefits Other than Pensions
As of December 31, 2006, upon discontinuation of retiree medical benefits, Health Reimbursement Accounts (HRAs) were established for eligible participants and totaled $7.3 million. As of December 31, 2020, the balance of the previously established HRAs was $1.3 million. Funding of HRAs was $0.1 million, $0.1 million and $0.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.
2021 Contributions
In 2021, there is no minimum funding requirement for the Company's defined benefit plan. The following table discloses that minimum funding requirement and the expected full year contributions for the Company's plans.
($ in thousands)Defined Benefit Pension Plans
Defined
Benefit Plan		Supplemental
Defined Benefit Plans
Minimum funding requirement for 2020$— $— 
Expected contributions (approximations) for the year ended
December 31, 2021 at the time of issuance of this Form 10-K (1)
$— $1,282 
N/A - Not applicable.
(1)    HMEC's Annual Report on Form 10-K for the year ended December 31, 2020.
Estimated Future Benefit Payments
The Company's defined benefit plan may be subject to settlement accounting. Assumptions for both the number of individuals retiring in a calendar year and their elections regarding lump sum distributions are significant factors impacting the payout patterns for each of the plans below. Therefore, actual results could vary from the estimates shown. Estimated future benefit payments as of December 31, 2020 were as follows:
($ in thousands)202120222023202420252026-2030
Pension plans
Defined benefit plan
$2,131 $2,185 $1,979 $2,013 $1,942 $7,099 
Supplemental retirement plans
1,282 1,263 1,240 1,213 1,182 5,269